A Collaboration with the University of Pittsburgh

Texas settles Medicaid price inflation suit with drug manufacturer

[JURIST] Texas Attorney General Greg Abbott [official profile] announced [press release] Tuesday that the state has reached a settlement [text, PDF] in a Medicare fraud lawsuit it had brought against drug manufacturer Abbott Laboratories [corporate website]. In the suit [complaint, PDF; press release], Texas had alleged that Abbott Laboratories and other drug manufacturers had inflated drug prices that they reported to the state above what they actually charged drug distributors for the drugs. The state and federally funded Medicaid program would then reimburse the distributors for more than they had paid for the drugs, allegedly giving the manufacturer a competitive advantage, and allowing the distributors to illegally profit from the difference. The $28 million settlement with Abbott Laboratories, which continues to deny any wrongdoing, is one of several the state has either settled [press release] or is still pursuing against other drug manufacturers for similar practices. Bloomberg News has more. The Chicago Tribune has additional coverage.

In February, pharmaceutical manufacturer Merck [corporate website] agreed to pay $671 million to settle claims [press release, PDF; JURIST report] that it defrauded Medicaid and improperly marketed three of its drugs to doctors. That settlement [text, PDF] stemmed from two separate lawsuits filed in Philadelphia and New Orleans. The Philadelphia case alleged that Merck overcharged the federal Medicaid program by failing to disclose that it was offering drugs to hospitals at deep discounts. The New Orleans suit alleged that Merck offered price reductions on the drug Pepcid [product website] if hospitals agreed to use their product rather than that of their competitors. 

About Paper Chase

Paper Chase is JURIST's real-time legal news service, powered by a team of 30 law student reporters and editors led by law professor Bernard Hibbitts at the University of Pittsburgh School of Law. As an educational service, Paper Chase is dedicated to presenting important legal news and materials rapidly, objectively and intelligibly in an accessible format.

© Copyright JURIST Legal News and Research Services, Inc., 2013.